Cresco Labs Returns to Quarterly Loss as Cash Flow Improves

Cresco Labs reported its unaudited third-quarter results on November 6, 2026, posting $172.8 million in revenue for the period ended September 30, up 5% from a year earlier. The company swung to a $14.5 million net loss even as operating cash flow reached $26.1 million, producing a quarter of weaker margins but stronger cash generation.

Revenue was nearly unchanged from $173.3 million in the second quarter and above $164.9 million in the third quarter of 2025. The bottom line moved in the opposite direction: Cresco had reported net income of $15.4 million in the second quarter and a $22.0 million net loss a year earlier.

Margins and Taxes Drove the Loss

Gross profit was $79.5 million, or 46.0% of revenue, compared with $86.9 million and 50.2% in the second quarter and $79.4 million and 48.1% a year earlier. Cost of goods sold rose to $93.3 million from $86.4 million sequentially while revenue edged lower, accounting for the gross-margin compression.

Selling, general and administrative expenses fell to $57.7 million from $63.2 million in the second quarter, although they remained above the year-earlier $51.6 million. Those sequential savings did not prevent income from operations from falling to $10.7 million, compared with $13.4 million in the second quarter and $17.8 million a year earlier.

The same direction appeared in adjusted EBITDA, which Cresco defines as earnings before interest, taxes, depreciation and amortization, further adjusted for other income or expense, acquired-inventory fair-value markups, acquisition and non-core costs, impairments and share-based compensation. Adjusted EBITDA fell to $34.9 million, with a 20.2% margin versus 22.8% in the second quarter and 24.1% a year earlier.

Below the operating line, interest expense of $15.7 million exceeded operating income, leaving a $4.8 million pre-tax loss. A $9.7 million income-tax expense produced the net loss. In the second quarter, by contrast, a $19.0 million tax benefit had more than offset a $3.6 million pre-tax loss, helping explain the reversal in bottom-line results.

Cash Flow Moved in the Opposite Direction

Operating cash flow improved from $15.4 million in the second quarter and $6.2 million a year earlier. Purchases of property and equipment fell to $5.0 million from $9.3 million and $7.2 million in those respective periods.

Free cash flow, which Cresco defines as operating cash flow less property-and-equipment purchases plus tenant-improvement allowance proceeds, was $21.2 million. That compares with $6.5 million in the second quarter and negative $1.0 million a year earlier. CEO Charlie Bachtell said the company converted more than 60% of adjusted EBITDA into free cash flow.

Cash, cash equivalents and restricted cash ended the quarter at $75.8 million, up from $67.4 million at its start. The period included $43.4 million of investing cash outflows and $25.7 million of financing cash inflows. Cresco also reported $454 million of long-term notes and loans payable as of September 30, giving context to an interest expense that continued to exceed operating income.

Management Separates Readiness From Reform Timing

Bachtell described a quarter in which Cresco closed an acquisition, improved cultivation and ramped up a new state while maintaining the base business. He characterized the team’s execution as strong across those simultaneous priorities.

Shareholders also approved three special resolutions with more than 94% support. Bachtell described them as simplifying Cresco’s corporate structure and aligning the company with the U.S. investor base, but qualified that readiness for federal change: “That said, we do not build our plan around reform timelines. The business stands on its own, and Cresco will be ready to act when the next phase arrives.”

The quarter leaves Cresco with a clear financial tension. Cash generation strengthened, but gross and adjusted EBITDA margins remained below both comparison periods, and interest expense again exceeded operating income. Management’s refusal to plan around federal reform places the emphasis on the business’s own operating performance and cash conversion rather than a regulatory catalyst.